Paystand raises $20 million to modernize B2B payments with blockchain

Paystand has raised $20 million to modernize commercial payments using its blockchain-based platform so that paying a corporate bill is as easy as making a consumer payment with a mobile app.

The Scotts Valley, California-based company will use the money to accelerate its expansion of products and services and hire more people to get the work done. It uses blockchain, the decentralized digital ledger that is both transparent and secure. And the idea is to use it to disrupt a traditional business so that money can be moved instantly.

The second round of funding comes from DNX Ventures, Battery Ventures, Epic Ventures, Commerce Ventures, and Wildcat Ventures. Existing investors BlueRun Ventures, Leap Global Partners, Cervin Ventures, and Serra Ventures.

The Paystand platform makes complicated commercial transactions and payments as easy and fast for enterprises as Venmo has done for basic consumer-to-consumer transactions on smartphones.

Jeremy Almond, CEO of Paystand, said in an interview with VentureBeat that it will digitize the enterprise cash cycle, which typically lasts around 30 days or even longer. It operates on a zero-fee, subscription model that moves customers away from today’s costly, fee-based, transactions.

“It’s like Venmo for complicated transactions for commerce,” Almond said. “We are rebooting the financial infrastructure because a lot of it was built pre-internet. It holds companies back. We’re coming in with a new business model, doing payments as a service.”

It also automates the payment experience from invoice to reconciliation and integrates seamlessly with a company’s System of Record. Paystand also provides a real-time, fund-verified, blockchain assured payment network that can move money between businesses instantly.

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“A lot of folks charge 2% to 3% as a fee for moving money,” Almond said. “In commerce, that’s a huge chunk. You can’t do that. Our model does not penalize companies for success. Blockchain for us is an enabling infrastructure like the cloud was two decades ago. Blockchain is the infrastructure of the future.”

He said Paystand saves businesses over 50% on the cost of accepting payments and processing invoices while reducing DSO (days sales outstanding) by more than 60%.

Above: Jeremy Almond is CEO of Paystand.

Image Credit: Paystand

Almond said Paystand’s model is gaining traction, and in the last 24 months the company added 80 new large enterprise customers and posted a 2.5 times increase in revenue year-over-year. It has also grown its average monthly subscriptions by 240%. Its payment ecosystem has surged 60% over the past 12 months, with over 160,000 businesses transacting across the Paystand platform, saving hundreds of millions in fees.

Paystand’s technology digitizes the cash cycle for companies in a variety of industries, ranging from insurance to manufacturing to transportation to pharmaceuticals. For example, the platform helps insurance companies digitally receive premium payments and send claims money, and allows manufacturing companies to digitally pay suppliers and vendors.

“We enable the infrastructure between companies to use what they call smart contracts. We pay you on these terms. How do you ensure that happens? Blockchain infrastructure is good for that kind of things,” Almond said. “We have pioneered assurity as a service, which is our view of how the scaled commercial blockchain looks like.”

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The company has a hybrid public and private blockchain, which can combine security and high-speed processing. It works with multiple currencies.

Current Paystand customers include credit-card company JCB Co.; stroller company Bugaboo; veterinary-technology company Covetrus; bedding and home-decor company Parachute Home; and Silicon Valley Bank, among others.

Mitch Kitamura, a managing director at DNX Ventures, said in a statement there have been many advances in consumer payments made by Venmo, PayPal, and Square Cash. But he said $18.5 trillion in invoices (according to South Main Capital) are still paid with paper checks.

Paystand’s funding comes as the next generation of fintech companies are poised to upend traditional infrastructure and practices. With over 50% of the estimated $56 trillion in annual B2B payment volume (according to Goldman Sachs) still transacting via paper-based and pre-internet methods, the rise of more open, frictionless payment infrastructure has created a clear opportunity for disruption of a decades-old, inefficient, costly industry.

Paystand was founded in 2014, and it has 50 employees.

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